September 2023

The Corporate Word

Basket of goods “A basket of goods" in economics is a representative selection of items,

including food, housing, healthcare, and more, used to calculate inflation
through the Consumer Price Index (CPI). It helps track changes in
overall prices, aiding policymakers in making economic decisions and
adjusting wages and benefits to maintain purchasing power.

Finfluencer It is basically a financial influencer who aims at giving financial advice on

various different topics ( right now under talks to be regulated due to an
authorised and unwarranted advice)

Golden Parachute A compensation package or agreement for executives that provides

substantial financial benefits upon termination, typically in the context of
a change in control of the company.

PIPE Private Investment in Public Equity: A method of raising capital in

which a publicly traded company sells shares of its stock to private
investors, typically at a discount to the market price.

Marquee Asset The most imporatant resource or asset owned by a company. These may
be tangible or intangible assets contributing to the bottom line and
goodwill of the company.

Greenmail A practice in which a target company repurchases its own shares at a

premium from an unfriendly shareholder, often to prevent a hostile
takeover

Pay as you earn PAYE is a tax payment method where your taxes are deducted from your
salary itself, before you receive your salary.

Hysteresis A situation which arises when any historical event affects the future
economic path. Any disturbance in an economy will lead to a trickle down
effect, and the problem will persist for long. This rolling down impact is
known as the hysteresis effect.

Derivatives Derivatives are financial contracts whose value is based on an underlying

asset, like stocks, bonds, or commodities. They enable investors to
speculate on price movements or hedge against risks, without owning the
underlying asset.
 India’s Unsettling Relations With Canada: Undercurrents
Affecting Trade And Commerce
- Divyank Dewan
Background
Prime Minister Justin Trudeau's statement that there
were credible allegations linking New Delhi's agents to
the murder of Sikh separatist leader Hardeep Singh
Nijjar, who was the leader of the Khalistan Tiger Force
(KTF) and a designated terrorist in India, aggravated
tensions between the two countries and hampered trade
talks. India responded to the allegations by stating that,
rather than accusing India, Canada should clamp down
on anti-India elements operating on its territory. This
triggered a full-scale diplomatic conflict between the
two nations.
After that, Canada's trade commission announced that it
had halted negotiations with India on the proposed
treaty, just three months after both countries said they
hoped to sign an initial agreement this year. This is not
the first time that tensions have arisen between the two
countries; Trudeau's support for the farmers' protest in
India in 2020 did not sit well with the Indian
government. India deemed it an ‘unacceptable
interference’ in its affairs. The then-high commissioner
of Canada to India, Nadir Patel, was summoned by the
Ministry of Foreign Affairs and delivered a diplomatic
note, or demarche. The statement from India also
warned that it could have severe negative effects on
bilateral relations.
Even before Trudeau's presence at the G20 Leaders'
Summit in New Delhi, relations had begun to
deteriorate. Before his visit, Canadian government
officials made it plain that trade negotiations between
the two nations had been suspended due to "certain
political developments."
The Trade Deal
The treaty was tied up with Canada's Indo-Pacific
strategy and India was described as a "ideal destination"
for a Team Canada Trade Mission. Canada had stated,
while expressing interest in the Free Trade Agreement,
that Canada and India share an interest in expanding
their commercial ties.
The Comprehensive Economic Partnership Agreement
(CEPA) negotiations between India and Canada were
relaunched in March 2022, and the two countries were
eager to conclude them by the end of 2023. In fact, nine
rounds of negotiations had already occurred by July
2023, and discussions on goods, trade remedies, and
norms of origin were in progress before the conflict
arose.
However, this is not the first time that negotiations have
failed. Initiated in 2010 by the Manmohan Singh
administration, CEPA negotiations were abandoned in
2017 due to divergent perspectives. Despite that,
business and trade ties have flourished in their natural
course.
Trade Relations Between the Two Countries and
the Impact
In sectors spanning from infrastructure to start-ups,
India has been a key destination for Canadian
investments from organizations such as the Canadian
Pension Plan Investment Board and the asset
management firm Brookfield. Canada is the eighteenth
greatest foreign investor in India, having invested a total
of $3.3 billion between April 2000 and March 2023, or
0.5% of the country's total Foreign Direct Investment
inflows.
India was also Canada’s ninth largest trading partner in
2022, with bilateral trade between them touching $8.16
billion in Financial Year 2023.
As economic ties between India and Canada are driven by
commercial considerations and they do not compete on
similar products but trade in complementary products, it is
unlikely that these events will impact trade and investment
between the two countries.

Read more at:

https://economictimes.indiatimes.com/news/economy/
foreign-trade/what-has-trade-and-investment-ties-to-
fear-amid-india-canadas-intensifying-diplomatic-
tensions/articleshow/103776408.cms?from=mdr

https://www.thehindu.com/business/Economy/the-
potential-economic-and-trade-fallout-of-strained-
indo-candian-diplomatic-relations-
explained/article67349441.ece

https://www.reuters.com/world/americas/india-
canada-row-what-is-stake-2023-09-19/

https://www.businesstoday.in/magazine/the-
buzz/story/india-canada-tensions-as-the-diplomatic-
row-escalates-what-impact-can-it-have-on-bilateral-
trade-400035-2023-09-29
 India’s tryst with Data Privacy norms: Contemporary legal
changes and challenges
-Vidushi Jaiswal

Introduction

On August 11, 2023, the President of India signed the Digital B. Data processors: Companies that handle data on behalf of
Personal Data Protection Act, 2023 (Act or DPDP Act). The fiduciaries. Cloud service providers, for example, who host
new Act has a lot of modifications that makes it distinct from data for their customers, or 'know-your-customer' (KYC)
its predecessor, the 2022 Bill. Some of the important changes service providers who undertake KYC on behalf of banks.
include, among other things, the mention blacklisted Fiduciaries direct their actions.
countries with respect to the cross-border data transfer, the
restrictions imposed on the data fiduciaries, exclusion of the How would the companies collect the personal data?
data fiduciaries from directly accessing children's data
without any parental consent. The Act is brief, and its To acquire personal data, fiduciaries must either obtain an
provisions are principle-based and high-level, there is a lot of individual's consent or collect/process the data for specific
scope for further deliberation considering that the act will be "legitimate uses" authorised by law.
aided by further rules.
A. Consent: Fiduciaries must provide users with a notice
Understanding the essentials: Navigating through the that describes what data is collected, why it is gathered, the
intricacies of the Regulation users' rights, and how they can file a complaint with the
Data Protection Board (enforcing authority). Individuals
What is personal data? must provide clear and affirmative consent to process their
data for the specified purpose after reading this notice.
Personal data is data about an individual that can be used to Individuals must also be able to withdraw their consent.
identify them. This comprises identifiers such as name, phone
number, Aadhaar, and PAN. It also contains profile data or B. Legitimate uses: Companies do not require their
usage data, such as a user's preferences and choices. It only consent individually if they process data for certain
protects 'digital' data, not offline records. It does not apply to "legitimate uses" recognised by law. This covers scenarios in
non-personal data (business insights, anonymised data). which an individual freely contributes her data for a specific
purpose, or where data is processed to satisfy a specific need.
The primary question that lies here is, who will be affected by this
Act? Is the Regulation a pathbreaking one: Answering the
why and how?
Anyone who works with digital personal data. Collecting,
recording, structuring, storing, distributing, or any other The regulation has been a path breaking one because of the
automated activity on data is referred to as processing. The multiple layers that are attached to this Act. Once these layers
law recognises two types of entities: unfold, the revolutionary changes brought forth through this
act reveal the true nature of the regulation. There are
A. The Data fiduciaries are the companies that establish the definitely certain gaps that need to be addressed and can only
"purpose and means" of processing data. These are businesses be resolved through consistent deliberation.
that make decisions about their users' data. They are also
known as data controllers in other parts of the world. They
decide why data is required, how it will be used, and how
long it will be kept. They are legally responsible for the data
of their users.
1. Cross border data flows have been made easier.
Cross border data transfers are allowed except for the
countries that have been blacklisted. However, there is no
definite criteria or parameters on which a country could be
blacklisted. In a world which is dictated by the internet,
data privacy rules and compliances will give a good head
start to India’s data transfer regime. Interconnectedness is
the pillar of global trade and economy and anything that
facilitates a hassle free and safe data transfer is of utmost
importance.
2. The new act will increase scope of contracts
As far as the data privacy norms for children are concerned,
the companies are not allowed to access data of children
below the age of 18 without the parental or guardian
consent. Now, the question that arises here is what is the AI
or procedure to ascertain that the permission has been
granted by the child’s real parent or guardian? Is there any
specific verification process that would ensure the
credibility of the process? What is the process of
determining targeted advertisements and how will they
cater to the requirements in an efficient manner? What
about the companies that genuinely deal with children
algorithm and assess their data for the effective utilisation in
future?

It will increase the scope of negotiations and the Another noteworthy issue is that of the companies that
communication between the data fiduciaries and data would enjoy exemptions from the government in the light
processors. It definitely sets out obligations and rights of the of sovereignty, integrity, security and public interest and
data fiduciaries but does say much on the obligations of the order. It should also be noted that the functions of the data
data processors. Therefore, there is scope on the fiduciaries and that of the processors are not water tight
development of the set liabilities of the data processors. compartments and quite flexible and interchangeable. The
question that arises here is that at what point a data
Business may process children’s data with only verifiable processor would become a data fiduciary?
parental or guardian consent.
This new Act has been embarked and we can only see a
Business may process the children’s data with only brighter future for India.
verifiable parental or guardian consent. This is valid for
children up to 18 years of age and they are not allowed to
track data, monitor or send targeted advertisements to these
children. However, the government provide some
companies certain relaxations in case they are able to prove
that their processes do not harm the children’s data.

Conclusion: Contemporary legal norms and

challenges

There are a lot of challenges attached to this new data Act.

These challenges include themes like the proposed data
regulations for children and the exemptions provided to
certain entities in case they fall into the ambit due to certain
considerations made by the government. It also involves
the non-bifurcation of the rights and liabilities of the data
fiduciaries and data processors.
Read more at:

Digital Personal Protection Bill, 2022 (MeitY, 2022)

<https://www.meity.gov.in/writereaddata/files/The%2
0Digital%20Personal%20Data%20Potection%20Bill%
2C%202022_0.pdf>

Darshan Upadhyay , Soumya Shanker and Mriganc

Mishra, “Decoding the Digital protection Act” (
Mondaq, 24 August 2023)<
https://www.mondaq.com/india/privacy-
protection/1358400/decoding-the-digital-data-
protection->

India passes digital personal data protection act(Hunton

Andrews Kurth, 22 August 2023)
<https://www.huntonprivacyblog.com/2023/08/22/ind
ia-passes-digital-personal-data-protection-act/ >

Decoding digital personal protection act, 2023(KPMG,

August 2023)
<https://kpmg.com/in/en/home/insights/2023/08/deco
ding-digital-personal-data-protection-act-2023.html>

Digital Personal protection Act, 2023(Deloitte, August

2023)
<https://www2.deloitte.com/in/en/pages/risk/articles/th
e-digital-personal-data-protection-act-2023.html>
Navigating Through The Mediation Act, 2023: A Game Changer Or
An Underwhelming Attempt To Crack Add
-Purava Rathi

Background

The Mediation Act, 2023 (“The Act”) was notified in the

Official Gazette on 15th September 2023. The Act is a
comprehensive code in itself. The Act introduces online
mediation, community and institutional mediation for
commercial as well as civil disputes. The Act also refers to
parties’ discretion to opt for pre-litigation mediation as
opposed to the mandatory requirement in the Bill.

Such introductions are complemented by effective

implementation procedures. The Act is a substantially
improved version of the earlier frameworks and also
incorporates international norms and principles. Therefore,
2. Pre-Litigation Mediation: The particular provision was
the Act has the potential to be an absolute game changer in
a mandatory requirement under the 2021 Bill. However,
dispute resolution.
the same has been done away with and is made optional
subject to the discretion of the parties.
Impetus for Passing the Act

3. Procedure for appointment of the mediator: The Act

The Act comes at a time when the courts are stressing the
recognises the principle of party autonomy and allows the
need to turn to alternative dispute resolution mechanisms to
parties to decide the procedure for the appointment of
lessen the burden of the judiciary while also saving time and
their mediator. They may also apply to a Mediation
resources of the parties. A dedicated piece of legislation acts
Services Centre for the same. While choosing the
as a legal recognition that fosters the confidence of parties in
mediator, the parties must bear in mind that the mediator
the process. The Act aims to structure and streamline the
possesses the necessary qualifications and experience as
procedure for conducting mediation and delineate the rights
prescribed in the Act.
and obligations of the parties and the mediator.

4. Nature of the Dispute: The Act provides that civil as

Understanding the Nuances of the Act
well as commercial disputes can be mediated. However,
certain disputes have expressly been excluded from the
1. Mediation Agreement: The mediation agreement or the
ambit of the Act. These disputes include disputes of a
clause dealing with mediation within the agreement must
criminal nature, disputes involving and affecting the
be in writing. The term “in writing” has been construed to
rights of third parties, environmental matters, disputes
mean, (i) a document between parties; (ii) contained in an
relating to the collection of tax, etc.
exchange of communications or (iii) contained in any
pleadings where one party alleges the existence of such
5. Prescribed time limit: Mediation proceedings under the
agreement, and the assertion is not denied by the other
Act must be completed within a period of 120 days from
party.
the date of the first appearance before the mediator, which
may be extended for a maximum period of 60 days with
the mutual consent of the parties.
6. Date of Commencement and Expiration: The mediation
process commences on the date of receipt of notice
initiating mediation. The date when mediator
communicates his consent, or the date of appointment of
the mediator by the mediation service provider is to be
considered. The proceedings are deemed to terminate when
the settlement agreement is signed or when the mediator
signs the non-settlement report. The proceedings may also
terminate on the date when parties opt out of mediation.
7. Institutional and Community Mediation: The Act
provides for the establishment of the Mediation Council of
India (“MCI”) to develop India as a centre for domestic and
international mediation. The main function of this Centre
would be to oversee the conduct of institutional mediation.
Community mediation entails the conduct of mediation by
a panel of mediators set up by the District Magistrate or
Legal Services Authorities. The qualifications for selection
to the panel are ‘persons of standing’, or persons who have
contributed to society, etc.
8. Challenge: An aggrieved party may challenge the
settlement agreement within 90 days on the grounds of
fraud, corruption, impersonation, or in cases where the
mediation was conducted in disputes or matters not fit for
mediation.
By providing a definite timeline, one can expect timely
resolution of disputes, especially in cases where time is of
the essence. Further, mediation as a process is relatively
more cost-effective than litigation. Thus, making it a
lucrative and accessible option for all sections of society.
Conclusion
A dedicated piece of legislation governing mediation was
long overdue. The legislature has taken a step in the right
direction by acknowledging the voluntary nature of the
process and legally recognising a settlement reached via
mediation. Since India is a signatory to the Singapore
Convention, an Act as such was expected to reflect the
provisions of the Convention. What remains to be seen
now is if the Act is being implemented effectively.
Read more at:
1. https://www.mondaq.com/india/arbitration--
dispute-resolution/1369216/what-how-where-
when-and-why-of-the-mediation-act-2023
2. https://www.mondaq.com/india/arbitration--
dispute-resolution/1368218/the-mediation-act-2023
3. https://www.livelaw.in/articles/evaluating-the-
mediation-bill-237563

9. Settlement and execution: In case of a successful

mediation, the Mediation Agreement must be in writing. It
must be signed by the parties and authenticated by the
Mediator. This agreement is enforceable in accordance with
the provisions of the Code of Civil Procedure, 1908, in the
same manner as if it were a judgment or decree passed by a
court. The enforcement, challenge, and registration of the
agreement, will be deemed to have been undertaken within
the territorial jurisdiction of such court or tribunal.

Implications

The Act is quite promising in terms of furthering its

objectives. By providing a structured procedure and
instating the confidence of parties in the process, mediation
can be resorted to as the first choice of the parties.
Mediation shall help in preserving relationships between the
parties, business relations, or otherwise.
 Decoding the Zee-Sony Merger: An attempt to bypass commercial
laws
-Minal Gupta
Introduction
Speed Breakers
In 2021, Culver Max Entertainment, operating under the
guise of Sony Entertainment India, presented a proposal to In October 2021, a single judge of the Hon'ble Bombay
acquire Zee Entertainment Enterprises. The completion of High Court issued an injunction against Invesco
this acquisition, as anticipated in the near future, would Developing Markets Fund's order to convene a ZEE
elevate them to the second-largest entertainment shareholder meeting. Invesco had proposed an agenda,
conglomerate in the nation, trailing only Disney India & including the removal of three non-independent ZEE
Star in terms of market share. The agreement specifies that directors and the appointment of six independent directors,
Sony will assume a dominant position in the newly merged aiming to protect minority shareholders and enhance
entity, while the Zee promoter family will initially retain governance. Zee's board didn't respond to the request,
approximately 4 percent ownership, with an option to prompting Invesco to approach the NCLT, Mumbai. ZEE
potentially increase their stake to 20 percent. As part of the initially deemed Invesco's request illegal, but the Bombay
definitive agreements, the ZEE promoters have agreed to High Court overturned the injunction.
limiting their equity ownership in the combined company
to 20 percent of its outstanding shares. Regulatory Response

Background In August 2022, the CCI cautioned that the merger between
Zee and Sony could result in an abuse of their dominant
market position, in accordance with Section 4 of the
Sony faced significant challenges when it lost broadcasting
Competition Act, 2002. This concern is especially pertinent
rights for the prestigious Indian Premier League (IPL),
in India’s lucrative Hindi entertainment market. With a
resulting in a twofold increase in revenue and a sixfold
combined market share of around 45%, concerns were raised
surge in net profit. Meanwhile, Zee encountered hurdles as
about its impact on advertising and channel pricing
stock swap discussions with Viacom 18 faltered, and competition, posing a threat even to Disney India's Star
Invesco, a major shareholder, raised corporate governance network.
concerns. Zee's limited negotiation leverage and a
substantial Rs. 11,000 Cr debt at the holding company level In response, Zee and Sony proposed behavioral remedies,
compounded their issues. Recognizing a mutual benefit, including price incentives and independent advertising
Sony stepped in as a white knight. verticals. The CCI granted conditional approval to the
merger in October 2022, without specifying the
Sony-Zee Merger Strategy modifications required but emphasizing the prevention of
market dominance abuse.
At the current valuation, Zee Entertainment is set to retain
a 47.07% stake in the merged entity, giving Sony Pictures a
larger 52.93 percent share. Sony commits to ensuring the
combined company maintains a minimum of Rs. 11,000-
12,000 Cr. in cash reserves. Zee Entertainment shareholders
will receive pro-rata shares in the amalgamated entity as
ZEE Entertainment concludes its existence as a distinct
legal entity. Additionally, both entities will conduct due
diligence on each other within a 90-day timeframe through
designated data rooms.
The NCLT Challenge https://www.mondaq.com/india/shareholders/1359368/ze
e--sony-merger--a-journey-through-challenges-and-
Despite receiving approval from the CCI, the merger triumphs#:~:text=A%20Landmark%20Merger,%2C%20
process faced a substantial hurdle due to objections from distribution%2C%20and%20broadcasting%20capabilities
creditors, including Axis Finance, JC Flower Asset .
Reconstruction, and IDBI Bank, citing concerns about
ZEE's alleged loan defaults and fund misuse. https://www.financialexpress.com/business/industry-zee-
merger-to-take-a-few-more-months-says-sony-group-
These objections centered on two main issues: a 3258858/
contentious non-compete fee arrangement and the
appointment of Mr. Punit Goenka as CEO. Creditors
argued that the non-compete fee disadvantaged lenders and
ZEE's public shareholders, while regulatory scrutiny cast
doubts on Mr. Goenka's eligibility. Nevertheless, the
NCLT, after thorough deliberations, ultimately ruled in
favor of the merger, which analysts predict will create a 10-
billion dollars media giant with a dominant position in TV
channels, streaming services, and film studios, holding a 26
percent market share in the country's TV network
industry.

Conclusion

The Zee-Sony merger highlights the intricacies of media

and entertainment mergers, emphasizing the need for
proactive engagement with regulatory bodies and
voluntary remedies to address concerns. NCLT's approval
signifies a delicate balance between stakeholder interests
and market competition, aligning legal considerations with
the merger's strategic potential. Analysts anticipate
substantial synergies and project the merger to establish
India's largest entertainment network with a 26 percent
viewership share, especially dominant in Hindi GEC and
Hindi movies, making it a strong competitor against
market leaders Star and Disney in the medium to long
term.

Read more at:

https://economictimes.indiatimes.com/industry/media/
entertainment/media/nclt-approves-zee-sony-
merger/articleshow/102594876.cms?from=mdr
 Non- Cooperative attitude for the basis of imposing penalty:
Alankit Imaginations Ltd. v. DCIT
-Rohit Misra
Introduction
The Delhi Bench of the Income Tax Appellate Tribunal or
ITAT comprising of Anubha V Sharma and N.K. Billaiya
has held in the case of Alankit Imaginations Ltd. v. DCIT
that a ‘non-cooperative attitude’ just by itself cannot be a
ground for the imposition of penalties as such if the specific
notices and the non-compliances has not been brought on
the record.
Facts
The Assessee had challenged the penalty order under
Section 272A(1)(d) of the Income Tax Act,1961. In its reply
to the notice issued under Section 153(C) of the Income
Tax Act, 1961, the assesse stated that the returns were filed
and the assessments were completed in financial year 2011-
12 with no demand. As per the assessee, the penalty order
passed was in violation of principles of natural justice as the
orders do not disclose as to which notice was not complied
with.
Judgement
It was the contention of the assessee that since the orders
don't specify which notice was ignored, penalties have
been imposed without consideration. Additionally, the
assessments being done in accordance with Section 153(C)
and not Section 144 was given as grounds for there being
no need for a punishment for non-compliance.
The DCIT however argued that the there was no such
error in the findings of the Tax Authorities.
The tribunal had given thoughtful consideration to the
matter on record. The impugned orders indicate that all the
orders are similar except for change in figures relevant to
the assessment years. It was noted by the tribunal that the
penalty order in question did not mention as to which
notice and under what provisions of law it was issued. The
order also lacked details on how such order was served and
which part was not responded by the assesse.
As a matter of the facts, all the assessments have been
completed under section 153C of the Act and there was
no particular inference drawn against the assessee to
pass an order on judgement basis under section 144C of
the Act.
The bench stated that the assessment officer (AO) was
not justified in levying a penalty unless it is shown in
the assessment order or even under the penalty order
that during the assessment proceedings themselves the
AO had formed the opinion that there was intentional
non-compliance justifying issuing notice under Section
271(1) (d) or under Section 272A(1)(d) of the Income
Tax Act.
The ITAT set aside the penalty orders as the assessments
were completed under section 153C and not under
section 144 and the AO had imposed penalties without
specifically bringing on record the specific notices, their
specific non-compliances and the satisfaction that there
has been a non-compliance. In the light of aforesaid, the
tribunal stated that the orders of Ld. Tax Authorities
was not sustained and the impugned penalty orders
were to be set aside.
Read more at:
https://www.livelaw.in/tax- cases/non-cooperative-
attitude-basis-imposing-penalty-itat-238313?
infinitescroll=1.
https://www.livelaw.in/pdf_upload/alankit-order-
itat-493483.pdf.
 SEBI Regulations on Finfluencers
-Jyotsna Sood

Finfluencers and requires them to actively disassociate themselves

Financial influencers, colloquially termed as “finfluencers”,
are individuals or entities, often unregistered, who furnish
financial advice and information pertaining to the various
facets of personal finances through social media platforms.
These influencers may include unregistered Investment
Advisers(IAs) and Research Analysts who are frequently
purported to affect the financial decisions of investors.
from unregistered entities by notifying the enforcement
agencies concerned and registering complaints under
Section 420 of the Indian Penal Code,1860.
Additionally, it has also proposed guidelines to regulate
the finfluencers registered with the aforementioned
regulatory bodies that include compulsory disclosure
requirements and compliance with the prescribed code of
conduct and the advertisement guidelines.

The Consultation Paper Read more at:

On August 25, 2023, the Securities and Exchange Board of https://frontline.thehindu.com/society/rise-of-

India, hereinafter SEBI, released the “Consultation Paper on finfluencers-sparks-debate-over-influence-and-
Association of SEBI Registered Intermediaries/Regulated accountability-personal-finance-sebi-
Entities with Unregistered Entities (including finfluencers)” asci/article67273277.ece
which proposes to limit and regulate the association of such
unregistered influencers with advisors and entities registered https://www.sebi.gov.in/reports-and-
with SEBI. The paper was released a week after the statistics/reports/aug-2023/consultation-paper-on-
Advertising Standards Council of India (ASCI) released its association-of-sebi-registered-intermediaries-
revised guidelines on influencer advertising that necessitated regulated-entities-with-unregistered-entities-
registration of finfluencers disseminating investment- related including-finfluencers-_75932.html
advice with SEBI.
https://economictimes.indiatimes.com/markets/stock
s/news/sebi-to-curb-finfluencers-to-help-investors-
Proposed Regulations
get-accurate-unbiased-
info/articleshow/103324160.cms?from=mdr
The rise of finfluencers and the convergent nature of their
sphere of functioning with that of the SEBI has prompted
scrutiny from the regulatory body which has expressed its
concerns regarding the absence of regulatory control over
such individuals in the form of mandatory disclosure and
conduct requirements. With the aim of curbing their
revenue sources and obstructing the “perverse incentives in
the ecosystem”, SEBI has proposed to prohibit monetary and
non-monetary association of its registered entities with
unregistered finfluencers for promotional purposes. The
consultation paper seeks to forbid entities registered with
SEBI or stock exchanges or the Association of Mutual Funds
in India (AMFI) from sharing confidential client
information and paying referral commissions to unregistered
influencers
 Amendments to the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) Regulations,
2016
- Priyanshu Danu
In a significant move aimed at refining the Corporate
Insolvency Resolution Process (CIRP), the Insolvency and
Bankruptcy Board of India (IBBI) introduced crucial
amendments to the Insolvency and Bankruptcy Board of
India (Insolvency Resolution Process for Corporate
Persons) Regulations, 2016 (CIRP Regulations) on
September 18, 2023. The amendments, elaborated below,
aim to address several critical issues identified in the
resolution process, striving to enhance efficiency and
transparency and will be effective immediately.
Taking Control and Custody
One of the key amendments, Regulation 3A, outlines a
structured procedure for the interim resolution professional
(IRP) or resolution professional (RP) to take control and
custody of the assets and records of the corporate debtor
(CD). This move resolves the previous lack of clarity in the
regulations, ensuring a smoother transition of control
during the insolvency proceedings.
Timely Submission of Claims
To mitigate delays caused by late submissions, Regulation
12 of the CIRP Regulations has been modified. Creditors
can now submit claims until the issuance of a request for
resolution plans under Regulation 36B or within 90 days
from the insolvency commencement date, whichever is
later. This change empowers the RP to assess late claims
and present their views to the committee of creditors
(CoC) for consideration.
Empowering Authorised Representatives (ARs)
Amendments to Regulation 16A enhance the
responsibilities of Authorized Representatives (ARs) in
recognition of their pivotal role and are now tasked with
aiding creditors in comprehending committee discussions,
reviewing RP-prepared minutes, and evaluating resolution
plans.
These changes demand a higher level of involvement from
ARs, justifying the increased fees corresponding to their
augmented responsibilities.
Committee Oversight and Audit
Regulation 30B introduces a groundbreaking provision
allowing CoC members to propose an audit of the CD.
This audit, if approved by the CoC, ensures a
comprehensive examination of the CD's financial health,
with associated costs deemed insolvency resolution process
expenses. This fosters an environment of accountability and
transparency, further empowering the CoC in their
decision-making process.
Enhanced Information Disclosure
In order to improve transparency and facilitate potential
resolution applicants, Form G has been amended. The
revised format provides detailed information, enabling
prospective resolution applicants to make informed
decisions without unnecessary complexity.
Transparent Decision-Making
The amendments also focus on enhancing the AA's
understanding of CoC decisions. Form H, the compliance
certificate, now includes minutes of the CoC meeting
where the resolution plan was approved. This inclusion
provides the AA with valuable insights into the rationale
behind the CoC's decisions, ensuring a more transparent
and contextually informed evaluation process.
Seamless Assignment Processes
Regulation 28 has been refined, setting a strict timeline of
seven days for informing the IRP/RP about the assignment
or transfer of debt. This timely communication streamlines
the process, reducing bureaucratic hurdles and allowing the
CoC to function more efficiently.
Read more at:

https://www.livelaw.in/ibc-cases/ibbi-introduces-
amendments-to-cirp-regulations-238205

https://www.argus-p.com/updates/updates/amendments-
to-the-insolvency-and-bankruptcy-board-of-india-
insolvency-resolution-process-for-corporate-persons-
regulations-2016/
The regulatory tightening of online payment gateways: Need of
the hour?
- Pushpendra Dixit
Introduction
In a recent move, the Global payment services giant
PayPal has challenged the order of the Single bench of
the Delhi HC and the division has sought a reply from
the Union Government.
In recent years, online payment gateways have become
an essential part of everyday transactions. With the
growth of e-commerce and the increasing digitization of
financial services, platforms such as PayPal, Paytm, and
Google Pay have gained immense popularity. However,
the rapid rise of these payment service providers has
raised concerns regarding their regulation.
Payment service providers form an integral part of the
rapidly growing e-commerce industry, facilitating secure
and seamless online transactions. However, the
regulatory framework governing these payment
gateways lacks clarity which has led to several litigations.
Background:
Delhi High Court has earlier ruled against PayPal and
held that PayPal falls under the definition of a payment
service provider under the rules of the Prevention of
Money Laundering Act (PMLA), 2002. This judgement
highlights the need for stricter regulations on payment
service providers especially when they involve cross-
border transactions, to safeguard the interests of
consumers and ensure the stability and integrity of the
financial system.
PayPal knocked the doors of the Court when the
Financial Intelligence Unit imposed a penalty of 96 lakhs
on the grounds of alleged violations of provisions of the
PMLA. The Single Bench held that PayPal can be
classified as a “Payment System Operator” under PMLA.
Therefore, it is required to make certain disclosures.
Current Regulatory Framework for Payment
Gateways
The Payment Gateways prior to 2020 were governed
by the Payment & Settlement Act, 2007. The Act
created a framework for oversight and monitoring of
digital payment service providers, as well as standards
for client protection and dispute resolution. However,
with the evolution of the digital payment system, these
providers by Intermediaries Directions issued by RBI in
2009. Under this scheme, banks were required to act as
a nodal entity between merchants and intermediaries.
In the year 2020, the Reserve Bank of India issued
Guidelines on Regulation of Payment Aggregators and
Payment Gateways, that mandated RBI approval for
entities planning to venture into payment service to
merchants.
All these laws provide a basic regulatory mechanism for
the payment gateways, but in the absence of extensive
legislation outlining detailed provisions, there exists a
loophole in the current regulatory mechanism. The
recent judgement highlights the same, the judgements
underscore the importance of detailed provision in
statute for better compliance.
Possible Implications of Prospective Regulations
The implementation of stricter regulations on online
payment gateways has the potential to result in many
implications. First and foremost, the implementation of
stringent anti-money laundering and fraud prevention
measures can contribute to the establishment of a safer
and more transparent financial sector. This has the
potential to foster a sense of assurance among users and
mitigate the likelihood of occurrences of financial
malfeasance. Additionally, the implementation of stricter
laws may result in heightened expenses for payment
service providers.
This is due to the necessity of investing in system and Read more at:
process upgrades in order to adhere to the revised
requirements. Consequently, this could lead to an increase https://www.thehindubusinessline.com/business-
in transaction fees for both consumers and businesses. laws/online-payment-gateways-face-regulatory-
shake-up/article67291215.ece
Furthermore, the implementation of stricter regulations
may result in a reduction in the quantity of payment https://www.mondaq.com/india/fin-
service providers operating in the market. This is because tech/1357914/decoding-the-paypal-verdict
smaller and less regulated entities may encounter
difficulties in fulfilling the necessary criteria. https://www.thehindubusinessline.com/money-and-
banking/paypal-is-a-payments-system-operator-rules-
This has the potential to decrease competition and restrict delhi-high-court/article67119208.ece
the range of options available to users. In general, the
implementation of stricter regulations in the online https://www.livelaw.in/high-court/delhi-high-
payment business might have favourable results, such as court/delhi-high-court-paypal-payment-system-
enhanced security measures. However, it is crucial to operator-pmla-reporting-entity-237070
carefully evaluate the associated trade-offs to achieve an
optimal equilibrium between regulatory measures and https://www.bqprime.com/business/delhi-high-court-
innovation. seeks-government-reply-in-paypal-plea-against-
pmla-classification
Conclusion
In conclusion, these recent developments raise important https://www.scconline.com/blog/post/2023/07/26/delh
questions about the overall regulatory framework for i-high-court-paypal-reporting-entity-payment-
payment service providers. While the judgment has system-operator-under-pmla/
brought clarity on PayPal’s regulatory position, it also
highlights the need for a comprehensive and updated
regulatory framework that can effectively address the
challenges posed by the rapidly evolving online payment
landscape. It is imperative for regulatory authorities to
carefully consider the implications of such judgments and
work towards creating a transparent, secure, and fair
regulatory environment that encourages innovation while
safeguarding consumer interests.

Additionally, collaboration between regulators, payment

service providers, and other stakeholders is crucial to ensure
that the regulatory framework remains adaptive and
responsive to the changing needs of the industry,
ultimately fostering a thriving and inclusive online
payment ecosystem. Only through such coordinated
efforts can we achieve a balance between regulatory
oversight and technological advancements, thus advancing
the digital economy while safeguarding consumer
protection and maintaining financial stability.

R
 CCI's draft rules on value of transactions for
combinations
- Anisha Gupta
Introduction
In recent years, mergers and acquisitions have become a
commonplace strategy for businesses seeking growth,
market expansion, and operational synergies. In India,
the Competition Commission of India (CCI) plays a
pivotal role in regulating these combinations to ensure
fair competition in the marketplace. To streamline the
process and address various concerns, the CCI has
proposed new draft rules on the value of transactions for
combinations. These rules are designed to provide a
comprehensive framework for calculating the value of a
combination, which is a critical factor in determining
whether a merger or acquisition would trigger a review
by the CCI under the Competition Act, 2002.
Proposed Changes
The draft rules propose that the value of a combination
should include the "consideration paid" for the
transaction. This consideration encompasses not only the
purchase price of the shares or assets but also other
financial elements. Importantly, it explicitly includes
non-compete fees and royalties within the scope of the
valuation.
Non-compete Fees: Non-compete fees refer to costs
included in agreements that prohibits any individual
or entity from undertaking activities that are
competitive to a former employee or business parter.
Royalties: The inclusion of royalties in the valuation
is particularly relevant in cases where intellectual
property rights are involved. Royalties are payments
made for the use of patents, copyrights, trademarks,
or other intellectual property assets. By considering
these royalties, the rules prevent parties from
undervaluing the transaction by separating IP-related
payments from the main transaction value.
In addition to the consideration paid, the draft rules also
suggest that the value of assets or the turnover of the
business being acquired should be considered. This
provision is significant because it ensures that not only
the financial aspects but also the economic substance of
the transaction is evaluated.
Enhanced Competition Scrutiny
By comprehensively addressing these components in
the valuation of combinations, the draft rules aim to
prevent parties from manipulating transaction values to
avoid regulatory scrutiny. This not only enhances
transparency but also reinforces the CCI's ability to
effectively evaluate the competitive implications of
mergers and acquisitions in India.
The broadening of the scope in the Competition
Commission of India's (CCI) draft rules carries several
significant implications. Firstly, it extends the purview
of CCI scrutiny to more combinations, regardless of
their size. Smaller transactions that previously escaped
regulatory scrutiny due to falling below specific
financial thresholds will now come under the regulatory
radar. The aim here is to eliminate potential loopholes
and prevent regulatory arbitrage, ensuring that parties
can no longer structure deals in ways that artificially
lower transaction values to avoid mandatory notification
thresholds. Consequently, the CCI can more effectively
safeguard competition, even in cases that might have
been overlooked previously.
Secondly, the expanded scope allows for a more
comprehensive assessment of the competitive impact of
combinations. It recognizes that deals can impact
competition in diverse ways, considering elements like
non-compete fees, royalties, and other considerations.
Even when the transaction value is not exceptionally
high, the CCI can better evaluate the potential
implications on competition.
Furthermore, smaller transactions, while individually
modest, can collectively have a substantial impact on a
market. Subjecting these smaller combinations to
regulatory review enables the CCI to conduct a holistic
analysis of the market's competitive dynamics,
identifying and addressing emerging anti-competitive
trends early on. This, in turn, promotes a fair and
competitive marketplace, aligning with the broader
objectives of competition law, which prioritize
preserving competition and safeguarding consumer
interests.

Read more at:

https://economictimes.indiatimes.com/news/econom
y/policy/cci-issues-draft-norms-on-combinations-
under-amended-competition-
law/articleshow/103441321.cms?from=mdr

https://www.jsalaw.com/newsletters-and-
updates/cci-publishes-draft-combination-
regulations-for-public-
consultation/#:~:text=The%20Draft%20Combinatio
n%20Regulations%20set,scope%20of%20the%20'SB
OI'.&text=The%20value%20of%20the%20transactio
n%20must%20include%20every%20valuable%20co
nsideration,or%20deferred%2C%20cash%20or%20o
therwise.

https://www.businesstoday.in/latest/corporate/story/c
ci-releases-draft-norms-for-regulation-of-
combinations-397004-2023-09-05

https://www.bqprime.com/business/how-the-draft-
combination-rules-is-set-to-expand-ccis-ma-deal-
portfolio
 Discretion of the Liquidator in the final bidding: Eva
Agro Feeds Pvt Ltd v Punjab National Bank
- Rahul Mishra
Introduction
In the appeal of Eva Agro Feeds Private Limited Vs
Punjab National Bank and Anr., Civil Appeal No.7906
of 2021, a two Judge Bench of the Supreme Court
comprising of Justice B. V. Nagarathna and Justice Ujjal
Bhuyan passed a Judgment dated 06-09-2023. The
judgement was passed against the order passed by the
National Company Law Appellate Tribunal. It held that
the Liquidator was not justified in rejecting the
Appellant’s highest bid without citing any reasons thereof
and thereby, going ahead to conduct another round of
auction merely on the expectation that a still higher price
may be obtained.
Background
The primary dispute was between the rights of the
highest bidder and the liquidator's discretion to reject the
highest bid after the bidding process was over. There was
an inconsistency concerning the liquidator's discretionary
power between the Insolvency and Bankruptcy Code,
2016 (IBC) and the E-Auction Process Information
Document (hereinafter “Document”). The Document
outlined the particulars of the bidding procedure for
potential bidders. In this particular instance, it gave the
liquidator the sole authority to approve or reject any bid
but it is important to note that one of the document's
clauses required that it be read alongside the IBC and any
related regulations.
Facts of the case
A Corporate Insolvency Resolution Process under the
IBC was initiated on application by Huvepharma Sea
Private Limited against M/s Amrit Feeds Ltd. (Corporate
Debtor). The National Company Law Tribunal (NCLT)
admitted the application on 22-10-2019. On 19-02-21, a
Liquidation Order was passed due to the failure of the
CIRP. An e-auction was held to sell the corporate
debtor's assets.
Due to the failure of the first auction, a second auction
was held. The appellant, Eva Agro Feeds Pvt. Ltd., took
part in the e-auction and deposited Rs. 1 crore as earnest
money. Thereafter, the Appellant received an e-Auction
Certificate on 20-07-2021 from the Liquidator, which
certified that the Appellant had won the auction for the
assets of the Corporate Debtor. However, the
Liquidator cancelled the e-Auction and informed Eva
Agro Feeds Private Limited. Eva Agro Feeds filed an
application under Section 60 of the IBC, which was
allowed, and they were asked to deposit the balance sale
consideration within a specified time.
Eva Agro Feeds following the order, deposited the
balance on 10-09-2021. They received a Sale Certificate
on 15-09-2021. But Punjab National Bank, a financial
creditor of Amrit Feeds Limited, filed an appeal against
the NCLT's order, which was allowed by the National
Company Law Appellate Tribunal (NCLAT) on 30-
11-2021. Consequently, the NCLT's order was set
aside, allowing the Liquidator to initiate a fresh auction
process.
NCLT and NCLAT Ruling
The NCLT had, vide Order dated 12-08-2021, held
that the Liquidator had cancelled the e-bidding process
anticipating higher price in future auction process,
which cannot be allowed, as there cannot be an endless
wait to obtain a better price. The NCLT directed the
Liquidator to communicate to the Appellant to deposit
balance sale consideration. The Liquidator did not
challenge the NCLT order dated 12-08-2021 before the
NCLAT and rather, went ahead to comply with the
directions of the said order. However, Punjab National
Bank, filed an appeal against the NCLT Order dated
12-08-2021 before the Hon. National Company Law
Appellate Tribunal. The NCLT Order dated 12-08-
2021 was invalidated as a result of the abovementioned
Appeal being granted by NCLAT in an order dated 30-
11-2021. As a result, the liquidator was given
permission to start a new auction procedure.
Judgment Read more at:

The Supreme Court observed that no reasons had been https://www.scconline.com/blog/post/2023/09/09/n

assigned by the Liquidator for cancellation of the E- o-absolute-unfettered-discretion-of-liquidator-to-
auction held on 20.07.2021. Further, with regards to cancel-valid-auction-supreme-court-legal-news/
discretion as provided in in terms of Clause 3(k) of the
Document, the court ruled that if an arbitrary https://www.livelaw.in/top-stories/liquidator-does-
cancellation is allowed, it will not only lead to not-have-unfettered-discretion-to-cancel-auction-
unavoidable expenses but also erode the creditability of must-furnish-reasons-for-rejection-of-highest-bid-
the auction process. Further, the cancellation of an supreme-court-237234
auction can only be done in a scenario wherein fraud or
collusion has vitiated the auction process. https://ibclaw.in/eva-agro-feeds-pvt-ltd-vs-punjab-
national-bank-and-anr-supreme-court/
The court stated that rejection should be in accordance
with Clause 11 A of Schedule I of the Insolvency and
Bankruptcy Board of India (Liquidation Process)
Regulations, 2016 (Regulations) (Mode of sale) which
states “where the liquidator rejects the highest bid in an
auction process, he shall intimate the reasons for such
rejection to the highest bidder and mention it in the next
progress report”.

This Clause was added w.e.f. September 30, 2021, which

is far earlier than the e-Auction which was held on July
20, 2021 but the underlying principle behind its addition
—the principle of natural justice— remains the same. The
principle calls for the provision of justifications for
rejecting the highest bidder.

As a result, the Bench determined that there was no

rationale for rejecting the appellant's offer in light of the
aforementioned observations and further, that the
discretion of the Liquidator to cancel auction which is
otherwise valid is not absolute.